With property values high and rates still low, using the equity in your home can be a wise financial decision. AmeriCU offers fixed-rate home equity loans and home equity lines of credit (HELOC). Both options typically have better interest terms than other forms of credit but there are some differences. Which loan is right for you?
Home Equity Loan
With a home equity loan, you will receive the cash in a lump sum and pay it back through fixed payments and usually a fixed interest rate for the term of the loan. If you need a set dollar amount for a specific purpose or prefer set monthly payments, a home equity loan may be a good option.
Home Equity Line of Credit
A Home Equity Line of Credit (HELOC) allows a borrower to tap into their equity as needed up to a preset limit, based on the equity in your home. HELOCs typically have a variable interest rate and the payments can vary every month, as they are based on rate and the amount drawn against the line. The advantage of a HELOC is that you can draw the funds as you need them, with no new approvals needed, and you only pay interest on what you borrow.
A home equity loan or line of credit may be a first or second mortgage on your home and interest may be tax deductible in certain circumstances. We encourage you to talk with your tax advisor for more details.
Are you considering a home equity loan or line of credit? Come talk to us! We can walk you through your options and help you choose which may be the best for you. Visit any of our 19 financial centers or call 800.388.2000.